Gov’t extends gaming concessions to Dec. 31, experts not surprised
The government is planning to extend current gaming concessions until the end of 2022 to accommodate the progress of the relevant law amendment, Secretary for Economy and Finance Lei Wai Nong said yesterday.
Lei made the remarks while speaking to the press after attending a parliamentary committee meeting held to discuss the amendment bill to the gaming law, which has already been passed by the Legislative Assembly on first reading.
“In terms of time [sensitivity], there is a need to, pursuant to the current law, extend the concessions [for a period],” the Secretary said. “We have already notified all concessionaires [to apply for the extension.]”
Lei hinted that no application has been received as of yesterday. He added that, upon receiving the applications, the government will commence with their processing. For the time being, the government plans to extend the current licenses to December 31, 2022, if any application is received and approved.
Meanwhile, the six-month extension of gaming licenses came as no surprise to gaming operators, given the limited time remaining before the concessionaires expire on June 26.
As the amended bill is still being discussed by the Second Standing Committee, gaming experts late last year already forecasted that the licenses would be extended, with Chief Executive Ho Iat Seng previously saying that he would not rule out the possibility of extension.
Speaking to the Times, Ben Lee, managing partner of IGamiX Management & Consulting, said that while the extension came as no surprise, there are still several issues that need to be fleshed out.
“I expect more details when the finalized terms are issued in the RFP or earlier. For example, satellite casinos and the requirement of ownership. Non-gaming investment, what’s required? National security, what does it mean?” Lee questioned.
The long-awaited draft amendment came out in early January. However, there were several amendments that came off as ambiguous, such as the ownership of satellite casinos and the requirement for the administration of each gaming operator.
With these unclear rules, Lee had previously dubbed the amendment draft as “over-promised and under-delivered,” as the announced amendments fell short of the hype built up over the past months, causing analysts to take a pessimistic view and forecast for the future of the gaming sector.
The sector’s gaming stocks also recorded downturns, with a swift wipe of USD18 billion registered on the first day of the announcement that an amendment would be made.
Lawmaker Chan Chak Mo, who heads the committee, has suggested the law may be approved before the expiry of the concessions.
Lawyer Sérgio de Almeida Correia told the Times that the extension is “perfectly legal and legitimate,” citing Number 3 of Article 13 of Macau’s gaming law.
This also implies that casino operators will have another six months to earn revenue or increase losses, which for Correia, “doesn’t mean much given the current situation.”
According to the lawyer, the deadline is more than enough, as the law was already approved in general on January 24 and is now only before the Second Standing Committee for discussion and subsequent approval of the specifics.
“The government can already start preparing the tender program and present it as soon as the law is approved – that is, five or seven days later after final approval and publication in the Official Gazette,” said Correia.
He recalled that, in the previous tender, which was much more complicated than the current one, and indeed the first international tender, all processes were completed in four months.
“So, I think the time frame is reasonable. Potential bidders can start preparing their proposals right now,” he advised.
However, difficulties and uncertainties linger due to Macau’s zero-Covid strategy, causing fear among investors on what the return for them will be once they invest in the sector. A hurdle will be whether good proposals will be presented to investors, given the fact that the city is practicing zero tolerance of Covid-19, while still aiming to boost vaccination rates.
“Nobody is going to make millionaire proposals with the borders closed. [There are] thousands of cases in Hong Kong, and the Secretary for Security has said that the situation will continue: foreigners will not be allowed to enter Macau. Without anyone knowing when life will return to normal so that people can restart traveling and circulating like in the rest of the world,” said Correia.
Brokerage JP Morgan has said that it will not attempt to forecast the city’s gaming recovery for this year amid the Covid-19 crisis and the subsequent economic fallout and strict border measures implemented. The analysts at the firm admitted that they are less confident in their numbers than they were a year ago.
Macau’s USD3 billion VIP sector was also dealt a huge blow by the shutdown of junket operators servicing high-rollers, which may also affect the city’s recovery phase this year. Lynzy Valles & Anthony Lam
